New York — Even as the dwindling economy seems to be recuperating, but ahead of broader layoffs at AOL, the soon-to-be-independent company issued pink slips to 100 of their employees on Tuesday, in what several industry blogs are predicting it as a prelude to mass layoffs expected to occur once the company completes its spin out from parent Time Warner next month.
The slashing was first reported by Gawker Media’s Valleywag blog, will be widespread across the company, according to a source close to the decision.
While today’s layoffs are broadly spread across AOL’s various departments, however, it is not exactly part of AOL head Tim Armstrong’s comprehensive cost-cutting initiative — code-named “Project Everest” — which he has said is planned to look at streamlining roughly 10 individual teams at the company, and which is expected to take effect within the next month. Of AOL’s roughly 6,000 employees, layoff estimates range between 1,000 and as many as 2,000.
Although, Tuesday’s layoffs were scattered throughout different areas of the company and were not necessarily tied to any one particular business segment, but it might best best to think of them as “pre-Everest,” the source said, as that project is much broader.
While the layoffs are not related to a much wider restructuring that the embattled Web company is gearing up for either later this year or early next year, according to sources. But the timing may be coincidental, as AOL is said to be mulling a much larger restructuring that could result in far more layoffs. Currently the company employs close to 7,000 people.
While addressing the AOL staffers, Armstrong in essence laid out the reason for the layoffs as reflecting the company’s cost problems, during which it was revealed AOL’s ad sales revenue dropped by 18 percent during the third quarter along with its revenue challenges.
Armstrong has pointed out that the cuts would probably take until early next year to complete, people will be asked to leave voluntarily and then more than 1,000 workers are expected to be laid off around the time AOL is spun off its corporate parent, Time Warner.
The new AOL is likely to survive less as a Web portal and more as a divided network of niche content sites. This MediaGlow network, so-called, presently encompasses over 70 niche content sites — with many more on the way, according to Jeff Levick, who was recently appointed president of AOL Advertising.